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Friday, January 09, 2009

No end in sight

I feel bad for the next President with respect to our current economic prospective.I know I wrote and said this last year back in January of 2008, but the problem today from then, albeit just 12 months ago is five fold.Back then, we didn’t have a bailout for Wall Street banks which all them dumb azz senators (including Obama) signed off on and passed under the auspices that it would “fix our economic woes” - a bailout that gave these financial institutions approximately 50% of the United States GDP, without any strings attached or requirements supposedly to “free up credit markets.”

From his eloquent statements, I was under the opinion that Mr. Obama would not support the “reckless spending” that was reflective of the last 8 years – but his actions indicate otherwise.Obama talks about reigning in spending but his policies after reading are just as, if not even more reckless.Although I say this, I am inclined to give the President-Elect the benefit of the doubt.But things are drastic and not just from last January, but even more than when he was elected in November.

America's largest aluminum maker, the Pittsburg-based Alcoa, said it will cut 13 to 15,000 jobs.Makes me wonder what other raw materials companies will follow suit?Add to that the recent announcement that Airplane maker Boeing Co. plans to cut about 4,500 jobs; the announcement earlier this week that the drugstore chain Walgreens Co., will cut 1,000 jobs; data-storage company EMC Corp. (Boston) said it will cut 2,400 jobs; Logitech International (makes computer peripherals) and has offices in Fremont, California, expects to let go about 3,500 employees; and managed care provider Cigna Corp. announced it will be laying off 1,100 employees.Add to the aforementioned that Schlumberger Ltd. (oilfield services) plans to cut 1,000 jobs in North America and the rumor thatMicrosoft will reduce its workforce by 17% (15,000 workers), there seems to be no sight in end. Not to mention that down in these parts Georgia-Pacific may reduce its total workforce by some 25%.

I just hope that his desire to be seen as a moderate or centrist doesn’t reduce his ability to give us folks what we need for economic prosperity.The nation's unemployment rate got to 7.2 percent in December, and based on Labor Department's report, it is only going to get worse for President-elect Barack Obama. My concern is both pragmatic and rhetorical.His focus for Congress to "act boldly and act now," will just be a short-term fix and will not do ANYTHING to end the recession – it will be a while before this is over.Not to mention that his approach on taxes in contradict his own objectives (providing more discretionary income for middle-class families).Because if such was his desire, he would see that middle-class tax cuts amount to more loot than planned taxes for folks making more than $250,000 annually.All I am saying is that true, we need to take urgent and significant measure to deal with the economy, but they need to be reasoned and pragmatic.Taxing folks over 250k will only in my logic, make them move loot overseas to safe havens.If they were allowed to keep more of their loot, they would most likely save more, invest more, making more loot available for lending and more jobs.I don’t know where he got this advice from, I hope not Robert Rubin, who just resigned from being the head of CitiGroup ($20 Billion in losses last year). Whatever the case, things are bad, robberies are increasing and I am sure homeless shelters are becoming over-crowed nationwide. But then again, what do I know, its all speculation on my half.God Speed Mr. Obama, God speed.

44 comments:

Well, I agree with what you said. Our next president Obama will be under very pressure. But we'll have to wait many years until our economy goes good. I'm pretty sure our president will create many new jobs for people, but it won't be very easy.

Good post, man. Seeing you break down the figures like is sobering. I feel so bad for all these people. Hell, I thought my job was secure, but I'm just going to keep praying for them, and for all of us.

I do agree that I wasn't fond of the idea of another stimulus, but what else can be done? What do you think?

The unemployment compensation system in the county that I reside in crashed this week. The site went down due to the number of people applying.I believe the same thing happened in NY and NJ.

The O-State has been in the dire straights for so long the shyt almost seems normal. Ohioans were hit in a major way via the housing market. We ranked high on the list of the number of homes that were foreclosed.

At this point it is a living moment of Catch 22.You are going to catch hell if you do and you will catch hell if you don't.

What bothers me a lot is the fact that the people who can least afford to spend money are still walking around dropping loot as if they were eating paper and crapping money. Seemingly with no regards to the fact that if the Feddies cannot issue checks-they would flatline immediately.

There is not going to be any immediate sense of relief. I have no doubt about that. The economy is wounded. Healing hurts like hell and it happens gradually.

But what the hell-we are going to be in it. I just hope that we can survive the haul.

By the way, I can I adopt MS.Binky Pup? I need someone to declare on my taxes. :-)

What a wonderful blog, Raw Dawg. I heard about your break in from another blogger and will be buying a book or otherwise finding a way to support your biz sometime this month.

I've been wavering on Obama for some time now... I want to believe he represents real change but you know, a man has to show me more than pretty speeches and hopes because the times we are facing are gonna be tough ones. I wish I could say this man didn't have to prove himself to me, but it's politics.

My number one philosophical question regarding the TWFCSTGD (theworstfinancialcrisissincethe-greatdepression) --not quite as succinct a buzz kill as 9/11-- has been do you rip the band-aid off all at once or just peel it off slowly? Either way, if it don't come off the gangrene will get us all.

JONES, B'MAN: I've been there with you guys all the way on this. Bush/Greenspan-Bernanke/Congressional leadership are indeed responsible for letting it get like this.

That does not mean that Obama is suppose to throw his own plan in the garbage and use John McCain's.

There are six cost effective ways of taking fiscal pressure off, which would allow real stimulus from the bottom-up without risking a dollar collapse.

(1) Less War/Domestic control in budget by a lot. Much bigger VA allocaton. And then when Obama gets heat on it he can offer one of two choices: "let me make my war, defense, and redundant national security cuts and increased VA allocation or I'm going to get the money by means-testing Social Security and Medicare." [We know he's not brave enought for that.]

(2) Stop the bank giveaways and tax cuts for the wealthy

(3) Stop using this R&D investment in the future fantasy as "jam-tomrrow" bullshit and let the private sector do what Ford Motor Company did and get partnered up with world's two LEADERS in green tech: Brazil and Venezuela.

(4) Take first-world center-left and left-wing governments off the blacklist already so that the USA business can enjoy the easy dollar credit the rest of the world has.

To do that, stop calling every other nation which has a center-left or left-wing government a "terrorist" nation and start figuring out which ones have gotten it right.

(5) Use any money that would have been allocated in insufficient amount for portfolio of domestic R & D projects and use it for direct transfers to people in need or for infrastructure repair--road, bridges, tunnels, viaducts, aqueducts, filtration systems, transportation...

(6) Put a smaller amount of higher-multiplier, higher-velocity money into the hands of consumers and SMALL businesses. And no $100 MM market cap doesn't count as SMALL. Direct transfer to consumers up to and including re-federalizing and fully funding AFDC; non-recourse debt to qualifying businesses. Directly, not through tax system. Keep this to under $750 BN.

If he does these six things, he'll be able to stimulate the economy from the bottom up, start reducing the threat of WWIII, and he can bring the whole budget in at a deficit of less than $600 BN.

Will he do any of it? No. Why? Because using braincells to form policies that make sense in a modern, capitalist, self-governing nation is not what he enjoys. He enjoys using braincells to advance plan his own re-election and to look for all opportunities for self-aggrandizement with main stream media.

Why is that? Isn't he the savior? The man of "change"? NO. He's none of that. He's a Washington Insider, a professional politician who's job is NOT TO LEAD but to maintain power and raise money to run again. Win. Maintain power again. Build himself a library. That's his official job. POLITICIAN. Not LEADER.

Sadly, for him the people did vote for change and they're not going to stop wanting change no matter how much bull he slings their way.

He claims to enjoy working "across the aisle". He is not doing that. He is merely choosing Washington insiders who belong to a different club than he does into his one-party world. "Across the aisle" would be listening to what the LIBERTARIAN and POPULIST RIGHT and LEFT are saying, not just to Republican members of the permanent government. And we know he likes this image as a very religious man, so let him go into the Bapist, Fundamentalist, Evangelical and Pentacostal churches if that's what it'll take him to LISTEN.

If he can listen to WHITE Rick Warren at Saddleback he can go into the White Baptist churches in the most depressed coal hollars in WVA and KY and his home state and hear what starving WHITE people are saying. I merely use that as an example because he seems so afraid of appearing to the media too attentive to people of color who are starving!

What he never bothered to learn in all this time spent among rich people is the most basic lesson of all. There are more pleasant and less pleasant rich people, but ultimately rich people care about only one thing: STABILITY. They want stability so they know their wealth is safe.

95% of rich people would answer YES, ABSOLUTELY to this queestion: "Would you forgo a tax break Obama is offering you if you knew that by not taking it you would prevent a riot in Detroit."

He's got a lot of people fooled. But not everybody. Kucinich told a bitterly funny story on Democracy Now.

Each time a bailout vote was scheduled he'd go into the House Progressive Caucus room and say "your future president and your leadership insist you vote for this." By the third time, they were swearing and throwing stuff at him.

I don't think there is a fix, and I don't think anyone has seen anything like this before. Most of the leaders were babies during the depression or not even thought of. There is not current day equivalent of what we're facing.

I think Obama knows not to raise taxes on the 250K+ right now, although Pelosi disagrees.

Everyone has an opinion, but I don't think anyone knows how to resolve the issue. I can tell them what's wrong with their ideas, but I can't offer them an answer that I myself can't find holes in. I think this problem is far beyond principles of either parties. Obama better take the best from both, and ask for divine intervention.

I'm not sure if an economic stimulus package is a plus or minus. Maybe we should find 500 billion and just pay-off china, instead.

It is going to take one very hard working president to even get started cleaning up this mess. But I still have faith in President elect Obama. He may not get it done but will get us headed in the right direction.

Excellent post ... and I appreciate the information about the layoffs that are taking place. America lost jobs each and every month of 2008. Bush was asleep at the wheel. Obama will have a rough time. He has issues on all sides (unemployment, economy, Detroit auto industry, Israel-Gaza, Iran-nuclear, Iraq & Afghanistan). I feel ya on the worry about the deficit. I agree with Obama that now we have higher priorities ... like getting those 3 million jobs...

@ BUELAHMAN: You said it all right here: "Now, if I were someone looking to loan money,would I loan it to the fattest, the laziest, the meanest, and the nosiest mutherfucker on the planet?"

EXACTLY. I am someone, a permanent resident-investor living in another country, who has money to lend. By common sense, you've come up with what I've derived with math. All of those American qualities show up in the numbers: the fatness and laziness in the (-2.5%) real yield on the USD. The meanness and nosiness in the USD swap volatility.

So, as you suggest, not only am I NOT looking to lend USD, I'm also looking to BORROW USD to finance my lending of stronger currencies.

Torrance was right a few weeks ago on the show when he talked about doctors and scientists being the ones fighting the battles in the trenches and politicians being clueless. He said the same thing the next week about the traders knowing the economy and the regulators being clueless.

By Obama's appointments to the few justice and counsel spots he's made, I can tell he knows what he's doing in that area and the US can expect big improvements in that one area -- judicial improvements and some criminal justice priorities. Even in that area, however, no one is going to get it right every time. Look how badly he booted the seating of Roland Burris. He had to KNOW what he and Reid were up to was unconstitutional. I could chalk that one up to a rookie mistake. The whole Washington insider chorus, Democratic, Republican and MSM, were singing in tune and that tune was not in harmony with the constitution. So, he trusted in politics over the law.

If he's liable to goof that badly in an area he knows well, how can anyone trust him to get it right in two important areas he doesn't know well: economic and foreign policy?

I'm one who doesn't like watching the news due to all the artificiality and negativity...but I just can't help but continue reading your extremely informative blog. Even though it doesn't give me any hope, you're as real as they get... I thank you for your knowledge.

Man, I'm really disappointed at the type of stuff I'm hearing from the O camp. I said it then and I'll say it now that stimulus checks don't work. It's a waste of money and basically just a political move to gain favor in the public eye. I need to see some real thought processes occurring, especially since these are supposed to be the best and brightest minds.

When Bush got elected at least we knew Cheney was pulling the strings. I'm waiting to determine whose really running this show, cause the O man isn't showing me anything that I bought into. I'm so not happy right now.

I think he'll do the right thing. Or at least he'll try very hard to do the right thing. I get this sense from him that he really, really doesn't want to fuck things up, and that there's more to it than just getting re-elected in 2012. I have a hunch he'll fix the economy. No, I'm a lot more disturbed by this noise about not holding the crooks from the last administration accountable. Focus on the future my ass.

My blog's back up, by the way, in case you came round last week and missed me.

not to get all racial or nothing but its kind of funny because its like this...its like white ppl fcked up everything and have nothing left so now they hand it over to the brother to clean up the mess. I'm just saying...I really hope Obama makes at least a dent in repair...

also, i'm nervous as to whether the economy gets so bad things start to really look like they did during the Great Depression.I think it would be good for us self involved materialistic Americans to experience.when we pull out of it (assuming we do) we ll apprieciate it that much more...

Having had a small business, I can say with confidence that taxing a business at 250,000 and over is not wise. It should start with 500,000 in my opinion.

By the way, I wrote a piece suggesting that some of us brothas and sistahs don't see where we need to do anything to help the community. And I stole a phrase from you and asked, "Are we gettin' negro comfortable up in here?" Check out over at daddyBstrong.blogspot.com.Blessings and good luck getting your business back together.

I agree with all you said. Of course your posts are always on point. However, I think that there is an end in sight. Sure it's not in 09. It's not even in 2010, but I believe a turn around can begin in 2011 if congress gets it's act together.

good post...on a hard issue...these are hard times..anyone saying otherwise is deluded..and I think the D word is where we are...I think the Recession is long over...Obama is inheriting a giant mess we all know it...cuz we all are in it...

I definitely agree with you its going to take at least two terms to even begin to make meaning of all the tape and mess that we have going on right now...its really sad you know...and the American people have to understand that and i just hope we do

Man anytime major commondity providers start laying off thousands of people then the economy is in a bad state and anytime friggin' Microsoft has to start laying off people, this sh*t is really bad!

This economic travesty is not going to be fixed anytime soon. Obama made a lot of promises, but I believe he'll be too overwhelmed to stick with his own policies after Tuesday's big shebang. We can only hope that this brotha gives us his best efforts and not look like the other dumba**es that make promises to get into office, only to worsen an already horrific situation.